Good morning, everyone. I'm Sumanth Kulkarni, a Senior Biotechnology Analyst here at Canaccord Genuity . It's my pleasure to kick off the second day with Neurocrine Biosciences. Thanks for making the trip. I know you've come from a really nice place, so thank you for joining us. Neurocrine is a company that has been really good at commercializing its products and also has a robust pipeline. They're in neuro and endocrine, as you can tell from the name. Very successful on their commercialization efforts, and they have a burgeoning pipeline, a lot more of which we'll hear on their R&D Day that's coming up in December. With that, I'll turn it over to Kyle and Todd. Kyle is the CEO . He's been around for about a year now as CEO , but at the company for much longer than that.
Todd is, he knows everything about the company.
Not a problem. Six years in September.
With that, I'll turn it over to Kyle and Todd to make a few opening remarks, and then we'll go straight to Q&A. If you have any questions, please feel free to raise your hands. I'll get a mic over to you.
Thanks, Sumanth. Maybe just to start off here this morning, I appreciate Canaccord for inviting us here and having the opportunity to share a bit of our story this morning. We will be making forward-looking statements, so I'd like to direct everyone to our latest SEC filings for the risk factors of the business. Again, thanks for having us. I'm really excited to be at this point of the year because it gives us the opportunity to reflect a bit on where we started 2025. You probably heard us talk a lot about the evolution and focus on evolution execution on the company this year. It's important for me to have that view and focus stepping into this role about October of 2024. We're making good progress along those lines of evolution and execution.
On the evolution side of the business, it really is at the top of the chain in terms of looking at our commercial portfolio. We added an additional product in December of 2024, and we've launched that now two quarters in in 2025. The launch is meeting our expectation. That has to do with CRENESSITY and a rare endocrine disease called congenital adrenal hyperplasia. The medicine is important to us in several ways, and this is part of that evolution. It adds a second leg of revenue growth for the company, and it also diversifies our revenue away from INGREZZA. Those two pieces are very important for Neurocrine and for myself when we think about those pillars that you need to be a high-growth company and continuing down that path that started with INGREZZA eight years ago. That revenue growth, diversification to those pillars.
The other one that I hope that we can talk a little bit about today is the sustainability of the pipeline. We have elements of that ongoing now at the company. We have that on the commercial side. On the research side, it's been a dedication to being a more productive resource organization relative to our history, which means the right focus in new areas for us. Having the right balance of internally discovered programs as well as externally sourced programs, moving away from small molecules exclusively to multimodality molecules, having the right mix and balance of validated to unvalidated targets across the portfolio. By validated, I mean clinically or genetically. You bring those things together and you really start talking about a research organization that is able to match the right modality to a given target. When you bring those two pieces together, you get increases in productivity.
That is why we've seen and heard out there from our colleagues, myself, Todd, others on the management team, this idea that at steady state, we hope to have four new Phase 1 starts per year, two new Phase 2 starts per year, any given moment, three Phase 3 programs, and this would afford us one new medicine every other year. High standards, very high bar here at Neurocrine , but that evolution is already in flight. I mentioned CRENESSITY. We've started three Phase 1 programs this year. We are well on our way for achieving our milestones on Phase 1 starts. On the execution side, just for a quick update, we have all of our Phase 3 programs up and running for osavampator in MDD. Those are three Phase 3 trials and two Phase 3 studies for dracoledine in schizophrenia.
Very excited about the progress we've made around that path of evolution and execution. There are still a few more months left of the year. Excited to see what we can do.
I'll switch the script a little bit here. I'll start with CRENESSITY over INGREZZA. You've had a really solid start. You mentioned that it beat your own expectations. What do you think the street or you guys were missing in terms of your ability to beat estimates so easily on this round?
First of all, I wouldn't have the street beat itself up too much. We're beating our own internal expectations in terms of the launch. I guess what I'd probably start with and just double down on, remind people, is that we started disease state education well in advance of the approval of CRENESSITY. I think that's a big part of the success that we've had to date because it really engaged activated physicians across the three different groups. What you're talking about, physicians at centers of excellence, you know, the 1,000 pediatric endocrinologists that are out there, or the 8,000 community endocrinologists, being out there in advance of CRENESSITY, talking about the disease state, really put CAH, congenital adrenal hyperplasia, top of mind. When CRENESSITY was available, I think they could begin talking to their patients out of the gate.
I think that's been a nice surprise for us to see that we've had good uptake in terms of CRENESSITY across those three different HCP segments.
You mentioned those segments. What do you think the key variable is to keep the momentum going on CRENESSITY?
I think that what I would say here on this is something that's not unique to CRENESSITY, but to all medicines, and that's patient identification. When you're thinking about a disease like CAH, it's a rare endocrine disease where, for all intents and purposes, there's been no medicine specifically designed and developed for the disease. What you often see is over the course of a patient's life, as they become a bit apathetic about the treatment of their disease, they stop asking about new opportunities to better care for their symptoms over the years. It's really engaging those patients to start asking those questions about what might be available as they go from a pediatric patient to an adult patient that can help them over time.
It's breaking through that barrier, identifying those patients over time, and making sure that all the patients in this rare orphan disease have the opportunity to learn about CRENESSITY and see if it's right for them. Hopefully they'll try to stay on CRENESSITY. That's the new patient starts that we talk about over time. It starts with just a simple goal: making sure that patients are aware that there's a medicine for their disease and then allowing them to go down that education journey.
How is real-world usage of steroids by patients with classic congenital adrenal hyperplasia affected by the use of CRENESSITY? Do you think reimbursers might set up some bar after certain periods of time to see how that steroid usage is tracked?
I think on the GC- reduction piece, right now it's still early days and where we are relative to launch to start hearing some of the feedback from physicians that are out there. I think what we see is that the experience of using CRENESSITY at this point of a launch is occurring in basically three phases. One is they're laying CRENESSITY on their background GC dose, and they're very keen, the physicians, that is, to understand safety and tolerability of CRENESSITY in the patient population. Safety and tolerability is what wins the day here with patients. After some time, if they see that the patients are doing well from that perspective, they're really interested in looking at how CRENESSITY is able to reduce their ACTH and androgens and control those different elements. If that looks good, the third piece is let's start lowering their GC dose.
Really, it's with the mindset of looking at how we performed the Phase 3 clinical program and reducing that GC dose to below that 11 mg /m² per day kind of threshold. We're just moving through that now, and we'll learn more about this a bit more over time.
Yeah, on the payer front, a couple of points. One of the many surprising facets of this launch is the high level of reimbursement that we've gotten out of the gate. In Q2, it was 76%. That has been really great. Point two is most of this is commercial versus INGREZZA is mostly Medicare, so it's a nice way to diversify the payer mix. In terms of coverage determination or requirements where there are, it's right in line with the label. The patient needs to have classic CAH, needs to be four years or older, and needs to be on concomitant steroids. So far, so great, we like to say.
On that note, from a competition standpoint, how are you thinking about what potential competition could come in over the years on CRENESSITY?
From a competitive standpoint, I think where we are with CRENESSITY relative to other companies that are in the space is it's probably not fair to talk too much about competition at this point. The data sets are so different across the companies that are here. I will say generally, competition is a good thing. It's good for patients. It gives them options. I think even for the companies that are working in this space, it brings out the best of us in terms of delivering on innovation for patients. What I hope people can understand and appreciate about Neurocrine is that we have a history of being first in a variety of disease states, and we shine a light on diseases that are underserved by current medicines. If that's what we end up doing here for CAH, that's a pretty good spot to be.
I will say, as I mentioned, how we're seeing physicians use CRENESSITY today does come back to safety and tolerability. Efficacy gets your foot in the door, but safety and tolerability is what really wins the day here. We really like our approach of controlling the HPA axis upstream and having us have the ability to control all the downstream hormones and other aspects of the disease that are important for CAH.
Yeah, we have right now an FDA-approved clean label with unsurpassed efficacy, unsurpassed safety, and unsurpassed tolerability.
That's a lot of unsurpassed there. What is the excitement factor around ex-U.S. plans for this product and what would that mean for Neurocrine as an organization?
Yeah, if you recall a bit about the history on CRENESSITY, in particular in 2024, we filed the NDA in Q2. I'll give you a little bit of history on the responses I'll be giving you here. We anticipated, you know, a standard one-year review period. We're all hoping for priority review, but none of that's guaranteed. We did get an accelerated review from the agency with PDUFA dates that were at the very end of 2024. The team, whether it was from a clinical perspective or a commercial perspective, was really on an accelerated path to prepare for the launch of CRENESSITY. We actually got approval a couple of weeks before PDUFA dates, and it really just has added to a lot of focus of the teams to make sure that we were doing all that we could to successfully launch CRENESSITY in the U.S. market.
We're still working through that now, and we think that we've made the right choice to focus on the U.S. market right now. We're evaluating what the opportunity is and plan ex-U.S. Right now, I wouldn't say anything is imminent there from a filing perspective or commercial perspective. Right now, the focus is on the U.S. market.
We'll switch now to INGREZZA, which is a multi-blockbuster product. You narrowed your sales outlook for the product this year. What needs to happen for you to meet or beat that number comfortably?
Q2 was a very productive quarter for us with INGREZZA. Just to recap, we saw $624 million in revenue. That was 15% quarter-to-quarter growth and 8% year-over-year. Those kind of high-level numbers that we've shared are really just the tip of the iceberg of what has gotten us excited about Q2. It really is a reflection on what we're doing at the prescription volume level, the number of patients that were coming into the mix. We saw a second quarter of record new patient starts. We saw a record quarter for TRX. What this translated to was increases in market share and new to brand, as well as total prescriptions relative to our competitor in this space. All those are very encouraging.
In fact, I would go the extra mile and say that being eight years into launch and seeing us succeed like we did on those different aspects doesn't happen by chance. It's because we have a strong fundamental business that's attached to INGREZZA and a very robust TD market in particular out there where nine in 10 patients still are on a VMAT2 inhibitor. The other piece that came into play here was we did improve our access quite significantly from 2024 to Q3 of this year. In fact, when we began the year, we had about 45% of all covered TD and HD Medicare beneficiaries. That was where we stood from an access standpoint, and we improved it from 45% to 70%. The access improvements spanned Q2 and Q3 this year in terms of when these different expansions occurred, improvements in access. That does come at a cost.
When we think about guidance, then in the variables that play into that, in particular for the quarter, we narrowed our guidance to $2.5 billion- $2.55 billion for the year. It goes back to the cadence of NRX, persistency and compliance of TRX, and where certain marketing and market investments come into play throughout the course of the year. We did have those access pieces come online in two different quarters, Q2 and Q3. The guidance we've given you, we will give you because we believe we have a good shot of meeting that for this year. All the measurements that we have out there, in particular on new patient starts and overall volume, we're tracking right where it should be. We're looking at an expectation of double-digit growth for this year.
It gives us a lot of momentum towards the end of this year and heading into 2026 for very robust.
Yeah, I'll just add for 2026, a lot of the contracting for 2026 is locked up. There'll be pricing stability from the second half of this year into 2026.
You paved the way for the tardive dyskinesia market with your product. Now you have a competitor, Teva, with AUSTEDO and AUSTEDO XR. How do you expect the competition to play out once Teva's AUSTEDO and AUSTEDO XR are subject to the Inflation Reduction Act or IRA?
I think we acknowledge that we don't have all the answers here when it comes to the IRA , whether you're talking about unintended consequences of brands that don't go through a negotiated price versus those that have a negotiated price in a given year. In our own IR A environment, which happens starting with a negotiation in 2027 and implementation in 2029, there are things that we do know, though. One is the TD market is incredibly robust. You just heard a quote from me on nine in 10 patients still not on a VMAT2 inhibitor. To add a little bit more to that, there are 100,000 patients out there in the U.S. with TD. The fact that nine in 10 patients are still not on a VMAT2 inhibitor tells you the growth that still remains. That would be point number one.
Number two goes back to what Todd just mentioned. We have a pretty good handle on our business through the end of 2026, both from the perspective of our marketing initiatives as well as where we are from a market access standpoint. The third one is when we think about INGREZZA, when patients start INGREZZA, they tend to stay on INGREZZA. It's a very good medicine. At the end of the day, patients don't switch a lot in this category. Fast forward to 2027 when our competitor goes through a price negotiation moment on their own. It really is a story about new patient starts, not switching that goes on in different disease states. We will look at different ways to improve our access over that timeframe as we have this past year. We know and have shown over time that we can grow the business through an exemptions process.
We are excited still for the business moving forward. A lot of room to grow. There are things that we know and don't know. Ultimately, it comes down to growing the business in all facets, not just with INGREZZA, with CRENESSITY, the pipeline. It will be the combination that makes the company stronger and resilient as we move it.
You've got a long tail on INGREZZA as well because we have IP out to 2038, so you got 13 more years.
Just staying on the IRA topic, what examples are you watching to give yourself insight into how a competitor product might behave? If your product might behave if a competitor's product is for the same indication as IRA ?
I think we'll be actively listening in a lot of different ways. The first round of 10 medicines were negotiated already, and we'll see their prices being implemented next year. We'll start listening to what companies are saying that are in those categories. That is, they were medicines that were not negotiated, but they're in categories where there's a brand that was negotiated. We'll start following what they're saying and what they're seeing out there for their particular medicines. We'll be doing the same from the perspective of PBMs because these medicines that are negotiated represent a loss in their revenue. They may be talking about that as well, either publicly or maybe in our own conversations with them as every company has conversations with PBMs over time. If there are learnings that come from that, certainly we'll be looking at applying those to INGREZZA as we move on.
We have a few minutes, and I definitely want to go into the pipeline because you have a lot of products in there. This is probably a sneak preview of what's going to come on December 16. On NBI-'568, what are your latest thoughts on selective M4 agonists versus the dual M1/M4 approach and M1/M4 positive allosteric modulator approach?
I think maybe I'll start with the last one, the positive allosteric modulator. It's a completely different mechanism than what we're trying to employ with our muscarinic agonists that are agonists, which are orthosteric agonists. They don't require anything else to come together to drive efficacy. Let's put the PAM aside for a moment because it's hard to compare apples to oranges there. In terms of our own programs, just a high-level overview, our lead muscarinic program is a selective M4 agonist, and it was formerly called NBI-'568. We actually have a generic name now, dracoledine. It's in replicate Phase 3 trials right now for schizophrenia. We also hope to move it forward later this year in a bipolar mania trial that will be your typical Phase 3 type of study. That's our selective M4 program. Just behind that, we have a dual M1/M4 molecule called NBI-'570.
That's something that we'll be moving forward later this year in a Phase 2 trial in schizophrenia as well. No one has the portfolio of agonists that we have that range from M1 selective to M4 selective and different flavors in between. We have a wealth of different types of programs that we can actually study in similar patient populations and compare and contrast things like efficacy, safety, and tolerability. You're seeing a bit of that play out now between dracoledine and NBI-'570. We hear and appreciate the interest in understanding, you know, what is the benefit of adding M1 to M4. We hear that from the perspective of a competitor in this space, COBENFY, which Bristol Myers Squibb commercializes for schizophrenia, which is a different type of approach where they have to add back peripheral antagonists to attenuate safety and tolerability.
We don't have that issue or that challenge with our own dual. It has a selectivity on just the subtypes that we're interested in. We would like to understand if there is differential efficacy versus dracoledine that's in Phase 3 now. We'll be able to have that data relatively over the same timeframe as our Phase 3s read out.
To your credit, as an organization, you've always run classical dose-finding Phase studies. Now, we kind of know what happened with this product in the Phase 2. You went with a 20-mg dose. Could you go with an even lower dose?
I think if you look back at all the data that we've collected over time, and this ranged from preclinical models of disease through our Phase 1 biomarker work, the 20 -mg dose that we're taking forward in Phase 3 was always the one that outperformed lower and even higher doses. Because of that, we think we've got a good dose that we have in Phase 3. We really haven't seen anything beyond that from other exposures that we've studied historically. In the Phase 2 trial that we ran, that was an ambitious study design that we undertook for Phase 2. It was done for a number of reasons. One is, at a high level, we needed to catch up to other companies in the space and give us an opportunity to learn enough from that study that we could move into Phase 3.
That meant at the time that we had to understand what the efficacy profile of M4 agonists was in a schizophrenia patient population. Up to that point, we'd only been in healthy volunteers. We needed to understand if we're leaving any more efficacy on the table as it relates to that 20-mg dose. We hadn't studied higher doses. Last but not least, it was really trying to pick out a dose and dosing regimen for Phase 3. We were able to achieve all those from this study. Ultimately, the 20- mg dose outperformed with an 18.1 total PANS improvement, 7.5 point improvement on PANS placebo-corrected effect size of 0.61. The other aspects that were positive about the Phase 2 trial is the dose that we selected has all the same features of what's made INGREZZA so important in this patient population successful.
It's once a day, no food effect, no titration. These are all things that we want to take forward and hopefully replicate in Phase 3.
On your muscarinic agonist portfolio, are there any predictions on what you might think might be the highest value indication? Do you have any early thoughts on how your portfolio might work in older patients?
Obviously, schizophrenia, we know in the antipsychotic space that schizophrenia as an indication is the smaller opportunity relative to others that we've seen. The antipsychotics that are approved today have indications that range from bipolar disorder, bipolar depression, MDD, the list goes on and on. That's one of the reasons why we're moving into bipolar mania later this year is to expand on the patient population that we can potentially have a medicine that they can benefit from that goes beyond schizophrenia. No one's studied this yet, we think it's an important disease to go after, and there's a lot of biological rationale that it will work there. On the other side of the coin, if you want to think about opportunities beyond that in the elderly, there's been a lot of conversation around Alzheimer's disease psychosis. That is an interest of ours as well.
With the benefit of having multiple molecules in the muscarinic space, we're looking at all the Phase 2 data that we've collected across these molecules that have M4 activity, and we're looking at which one might be the best one to take forward in ADP. It's an elderly population. Safety and tolerability is very important. We'll have more on that, I think, later this year when we come together at our R&D Day in December.
You have a few seconds, but I do want to touch upon the major depressive disorder market. You have a Phase 2 coming for NBI-'770. We've seen what's happened with the Novartis program with their similar approach with the NR2B NAM. They're discontinued after Phase 2. You have Boehringer's product also in Phase 2. Do you characterize how you view your product in light of those two competitors? Also, moving to your Phase 3 for osavampator, how would you characterize success in that?
First on the NMDA NR2B NAM program, this is NBI-'770. You're right, it's in a Phase 2 trial right now. I'd say it's more of a signal-seeking study. Three doses of active versus placebo has an N of about 70 subjects, and we'll have data later this year. It works through the ketamine pathway on NMDA, so it's a validated biological pathway. I think we're also looking at a fast onset of efficacy here that's based on the hypothesis that when you antagonize the NMDA receptor, you can get a transient hyperglutaminergic state, and that's what floods the neuron and activates the AMPA receptor downstream. Being a little bit more selective than ketamine, however, we expect that the glutamatergic state that we're invoking here is much less severe or high as ketamine, and the associated effects that are attached to ketamine would be attenuated.
That's the promise that's been the hope of NR2B NAMs. We'll see what our data looks like. The primary endpoint for our study is the MADRS at day five. We'll see what the data looks like, and we'll go from there. As it relates to the Novartis or Boehringer compound, I don't have a lot of information on those here today. I think on the Novartis compound, we know that it's IV- administered. Ours would be an oral medication that would be taken just as any other type of antidepressant patients might be used to. Osavampator, just quickly, it's in three Phase 3 studies now, replicate studies, and we'll be looking at replicating really what we saw in Phase 2, which was a MADRS score at month two of about 7.5 points with an exact effect size of 0.75. Really good safety, tolerability.
I think the only thing that we saw that stood out from placebo was headache there, but really liked that profile of potentially being a first-in-class medicine for patients with depression.
We look forward to replicating the totality of the data.
Well said, Todd.
That's a good way to say it. With that, we're out of time. Thanks again. I'll save the business development question for next year.
All right. Okay. Thank you.
Thanks, Sumanth. Thanks.